For personal use only JB�Hi-Fi�Limited JB�Hi-Fi�Limited Full Year Results Presentation 30 June 2014 11 August 2014
AGENDA For personal use only 1. Performance – FY14 Highlights 2. Profit and Loss Statement 3. Trading Performance 4. FY14 Store Update 5. In Store 6. Out of Store 7. Cash Flow and Balance Sheet 8. Capital Management 9. Trading Outlook 10. Growth Opportunities Richard Murray Nick Wells CEO CFO
1.�PER FOR M ANCE�– F Y 14�HIGHLIGHTS For personal use only Total sales up 5.3% Comparable sales up 2.0% Gross margin up 17 bps EBIT up 7.5% and EBIT Margin up 11 bps NPAT up 10.3% EPS up 9.1% Total dividend up 16.7% to 84.0 cps Dividend payout ratio increased to 65% On-market buy-back of 1.4 million shares or ~1.4% 3
2.�PR OFI T�AND�LOSS�STAT E MEN T For personal use only AUST NZ (NZD) CONSOLIDATED FY13 FY14 FY13 FY14 FY13 FY14 $m Growth Growth Growth 3,140.8 209.4 3,308.4 Sales 3,292.8 4.8% 211.4 0.9% 3,483.8 5.3% Gross Profit 682.5 721.6 5.7% 37.1 38.1 2.8% 712.2 756.0 6.1% Gross Margin 21.7% 21.9% +18 bps 17.7% 18.0% +33 bps 21.5% 21.7% +17 bps 207.1 4.8 211.0 EBITDA 221.6 7.0% 5.6 15.7% 226.7 7.4% Depreciation & Amortisation 31.2 33.3 6.7% 2.5 2.5 -1.9% 33.2 35.5 6.9% 175.9 2.3 177.8 EBIT 188.3 7.1% 3.1 34.7% 191.1 7.5% EBIT Margin 5.6% 5.7% +12 bps 1.1% 1.5% +37 bps 5.4% 5.5% +11 bps NPAT 1 116.4 128.4 10.3% Headline Statistics: Dividends per share (basic ¢) 72.0 84.0 16.7% Earnings per share (basic ¢) 117.7 128.4 9.1% Cost of doing business 15.1% 15.2% +10 bps 15.4% 15.4% -0.2 bps 15.1% 15.2% +9 bps Stores 164 169 +5 stores 13 13 - 177 182 +5 stores 1 Profit attributable to owners of JB Hi-Fi Limited (excludes non-controlling interest). 4
3.�T R ADING�PER FOR M ANCE For personal use only Sales Sales Growth 1HY14 2HY14 FY14 Total consolidated sales grew by 5.3% to $3.48b, with Total Comps. Total Comps. Total Comps. comparable sales up 2.0%. Australia 6.5% 2.3% 2.7% 0.1% 4.8% 1.3% New Zealand (NZD) 0.5% 0.3% 1.5% 1.5% 0.9% 0.8% Australia 6.8% 2.8% 3.5% 0.9% 5.3% 2.0% Total Total sales grew by 4.8% to $3.29b, with comparable sales up 1.3%. The converted HOME stores 1 achieved comparable Sales Category Splits by Value (Total Aust) sales growth of 10.6% in FY14 post conversion. 18.7% Hardware 2 sales in FY14 were up 8.6%, with 21.5% 23.5% 25.4% 26.9% comparable sales up 4.9% driven by growth across the majority of categories. Software sales (Music, Movies and Games) in FY14 were negative 8.8% and on a comparable basis were negative 11.7% (FY13: -8.9%). 81.3% 78.5% 76.5% Comparable sales in 2HY14 were impacted primarily by 74.6% 73.1% the market wide decline in the tablet category in Q4 and weaker consumer sentiment since May. New Zealand Sales grew by 0.9% to NZ$211.4m, with comparable FY10 FY11 FY12 FY13 FY14 sales up 0.8%. 2 Hardware Software 1 13 stores were converted to JB HI-FI HOME in the 12 months to 30 June 2014. 2 Hardware is defined as all sales excluding the Music, Movies and Games Software categories. Note that the Hardware category includes Games Hardware and Appliances. 5
3.�T R ADING�PER FOR M ANCE . . . For personal use only Gross Margin Consolidated gross margin was 21.7%, a 17 bps increase on the pcp. GROSS MARGIN FY13 FY14 In Australia, the gross margin increased by 18 bps on the pcp to Australia 21.7% 21.9% 21.9%. New Zealand 17.7% 18.0% 21.5% 21.7% Total The market remains very competitive - consistent with the pcp. In New Zealand, gross margin increased 33 bps to 18.0% due to improved buying terms as we continue to gain market share. Gross Margin 22.0% 21.8% 21.7% 21.5% 21.1% FY10 FY11 FY12 FY13 FY14 6
3.�T R ADING�PER FOR M ANCE . . . For personal use only Cost of Doing Business (CODB) Consolidated CODB was 15.2%, up 9 bps over the pcp. CODB FY13 FY14 Operating costs were in line with Company expectations. Australia 15.1% 15.2% New Zealand 15.4% 15.4% We seek to maintain our low CODB through continued focus on 15.1% 15.2% Total productivity. In Australia, CODB increased by 10 bps to 15.2%. Store wages remained well controlled. In New Zealand, overall costs continue to be well controlled with CODB flat in FY14 at 15.4%. CODB 15.2% 15.1% 14.9% 14.5% 14.5% 1 FY10 FY11N FY12 FY13 FY14 1 All references to FY11N exclude the $24.7m Clive Anthonys one-off restructuring charge. 7
3.�T R ADING�PER FOR M ANCE . . . For personal use only Earnings Consolidated EBIT was up 7.5% to $191.1m and EBIT margin was EBIT MARGIN up 11 bps on the pcp at 5.5%. FY13 FY14 Australia 5.6% 5.7% In Australia, EBIT was up 7.1% to $188.3m and EBIT margin was New Zealand 1.1% 1.5% up 12 bps on the pcp at 5.7%. 5.4% 5.5% Total In New Zealand, EBIT was up 34.7% to NZ$3.1m and EBIT margin was up 37 bps on the pcp at 1.5% as we continue to build the JB HI-FI brand. EBIT MARGIN 6.6% 6.4% 5.5% 5.4% 5.2% FY10 FY11N FY12 FY13 FY14 8
3.�T R ADING�PER FOR M ANCE . . . For personal use only Earnings… Net interest expense was down $1.3m driven primarily by a lower interest rate environment. Effective tax rate was 29.7%, down from 30.6% in the pcp, driven primarily by the exercise of 1.4m employee share options during the period (FY13: 0.1m). NPAT was up 10.3% to $128.4m. EPS was up 9.1% to 128.4 cents per share. Looking forward we expect NPAT and EPS growth to more closely align as we anticipate neutralising the impact of shares issued under the JB HI-FI employee share option plan via regular on-market buy-backs. EPS (cps) 128.4 124.7 117.7 109.7 105.9 FY10 FY11N FY12 FY13 FY14 9
4.�f Y 14�STOR E�UPDAT E For personal use only FY14 store movements Eight new stores opened in FY14 (seven JB HI-FI and one JB HI-FI HOME): NSW : Roselands, Castle Towers, Homebush (JB HI-FI HOME) VIC : Melton, Craigieburn FY14 182 stores TAS : Rosny Park 177 WA : Ocean Keys 13 168 13 QLD: Indooroopilly 157 13 13 JB HI-FI stores in Australia were converted to 13 141 JB HI-FI HOME in FY14. 10 123 The final Clive Anthonys store and two JB HI-FI NZ stores were closed in FY14. 14 105 AUST 12 89 169 12 164 Target 155 144 of 214 131 stores 109 93 77 66 48 32 HOME 26 22 21 15 10 8 Acquired FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 July 2000 10 Total Stores
5.�IN�STOR E For personal use only Continued growth in market share JB has the ability to bring brands to life and create engagement in categories. Reputation for taking the deal and price leadership. Leverage our high foot traffic. High level of customer service. Passionate and knowledgeable staff. High level of loyalty and trust from customers: 1 ST in the 2014 Corporate Reputation Index released by AMR and the Reputation Institute - (2012 & 2013 #3); and - ranked 10th in Interbrand’s “Most valuable Australian Retail Brands 2014” listing (2013 #10). 11
5.�IN�STOR E . . . For personal use only Innovative displays create greater engagement with our customers …driving continued growth in market share! 12
5.�IN�STOR E . . . For personal use only JB HI-FI HOME – Capturing the opportunity Significant sales growth opportunity as we grow our share of the circa $4.6 billion home appliances market. Leveraging the strength and trust in the brand. Positive sales mix impact with medium term gross margins for the HOME categories expected to be above the company average. Through a combination of the growth in the connected home and appliances becoming more of a fashion statement within the home, we believe it is the appropriate time to expand appliances in the JB HI-FI model. 13
5.�IN�STOR E . . . For personal use only JB HI-FI HOME – FY14 Results The converted HOME stores achieved comparable sales growth of 10.6% in FY14 post conversion. Results to date suggest annualised incremental sales per store of circa $3m in the first year post conversion and increasing to circa $5m in the second year. During FY14 the Company invested $13.9m in the conversion of 13 existing stores to JB HI-FI HOME and the opening of one new JB HI-FI HOME store, all in Australia. We are taking the opportunity to refresh the existing stores as they are converted to HOME stores. As a result, we estimate CAPEX per HOME conversion at circa $0.9m per store, with CAPEX for a new HOME store at circa $1.8m. 14
5.�IN�STOR E . . . For personal use only JB HI-FI HOME – The Future JB HI-FI will become the retail destination for the connected home. With 22 HOME stores open at the end of FY14, our rollout is 1 year ahead of our original schedule. We anticipate converting 26 existing stores to HOME in FY15, with 17 to be converted in the first half, and opening 4 new HOME stores by the end of FY15. 75 As previously indicated, we see the potential for approximately 75 HOME stores by the end of FY16, with the long term opportunity still to be fully quantified as this will be dependent on space available in existing stores and the suitability of new store locations. 52 22 8 FY13 FY14F FY15F FY16F Forecast HOME Stores 15
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